Netflix Case Essay

In the brick and mortar movie rental industry, Blockbuster is clearly the leader. With the merger of Hollywood Video and

The movie rental industry is a living industry; there are constant changes with advances in technology, rights management, and the slow, but steady, move away from physical Media. Companies such as Netflix, Hulu, RedBox, and Blockbuster are being forced to look at new business models and try to keep up with these changes.

Blockbuster implemented a new strategy for customers to access their rentals in “five channels of distribution: in-store, by mail, through vending machines and kiosks, online, and at home (direct to the TV)” (DATAMONITOR, 2009). However, this strategy was a reactive approach to the problem produced ten years behind schedule. Wooldridge et al., (2007) stated that Blockbuster should select and adapt their strategy to respond to the fast changing market and maintain a competitive position. This was an obvious failure for Blockbuster. The changes in the market produced a decline in profit at a faster pace than the strategies that Blockbuster implemented to combat these losses.

Modern technology isn't disappearing and the need for movie theaters will continuously decline. If movie theater owners take the time to examine several of these options they will certainly find one that functions for them and begin to earn a revenue that is truly theirs.

Netflix does not allow customers to watch all released movie on demand. There are some movie that customer cannot instantly watch. If Netflix developed streaming service and figure out a problem of coexisting between rentals and streaming service, Netflix can create competitive advantage.

The third issue affecting Netflix is the age of movies that they offer to their customers. Netflix cannot deliver the newest movie titles online because they are not offered through VOD for at least a month after they come out on DVD. This is a huge disadvantage to their customers that exclusively use Netflix’s online service. This is the only advantage that Blockbuster still has over Netflix, because if someone wants to see a movie the day that it comes out on video then

Blockbuster Entertainment, Inc. was once a highly successful and profitable brick and mortar home movie and video game rental store. At its peak in 2004, Blockbuster had up to 60,000 employees and more than 9,000 stores. The idea behind Netflix came from an unsatisfied, embarrassed customer of Blockbuster, Mr. Reed Hastings, now CEO of Netflix, paid a $40 late fee because he returned the movie Apollo 13 six weeks later (Zarafshar, 2013). He began to contemplate ingeniously about a notion to change the movie-leasing pattern into a more pioneering industry. In 1997 Netflix was started as a DVD rental-by-mail business without subscriptions. In 1999, taking a stride additional in the direction of evolving the industry, Hastings began the subscription-based business mode based on renting DVDs by mail with plans reliant on the quantity of titles taken at a time. Netflix put forward 120,000 titles for limitless monthly DVD rental with free shipping no late and per title fees. Since that time Netflix has become one of the most popular subscription services in the world, and is now valued at over $28 billion and steadily increasing. What factors contributed to the success and failure of these two companies?

However, with competition there will always be issues brought on by consumer dissatisfaction and REDBOX is no exception. “REDBOX is losing some business as renters use kiosks to get new releases and go to Netflix for older, harder-to-find titles” (White, 2010). Recently, “REDBOX ended legal battles this year with three studios, News Corp.’s Fox, General Electric Co.’s NBC Universal and Time Warner Inc.’s Warner Bros., over access to DVDs. The studios agreed to sell discs to Redbox for rental after the movies had been in stores for 28 days. Walt Disney Co., Viacom Inc.’s Paramount Pictures, Sony Pictures Entertainment and Lions Gate

4. The bargaining power of buyers: The outlook for the target market isn’t favorable for the movie industry because it will not be growing as fast as the overall population. Buyer power is a strong force because of the target market and several other factors including: the undifferentiated product offered, switching to an alternative is simple and low cost, and customers can stay home and watch movies. The consumers are also complaining about concession and ticket costs, along with the advertisements before the film is shown.

Blockbuster was controlling the rental industry market when Netflix was trying to make a deal. The team worked so hard to create Blockbuster, and it was scary to just hand it over to a company online. No one knew it would be the future. Blockbuster

The always changing world of technology creates a challenge for many older businesses that once thrived years ago. Americans along with many other countries are becoming centered around immediate gratification and in a way, lazy. Fast is better and right now wins. When Netflix came into the homes of millions, it almost seemed like the end of all other movie rental providers. A change in leadership from a recent buyout has saved Blockbuster and has placed them as a leader once again in the entertainment business. Blockbuster has a new strategic plan that seems to be working, but a look into a

The video rental industry was one of the more growing services retailers in the mid-1990s. However, due to Blockbuster, many rental video companies have failed to compete against this category killer. West Coast Video, Video City, and Hollywood Video, which are among the few and only large competitor 's of Blockbuster in the tri-state area. Many family-owned video rental stores could not compete against Blockbuster 's assortment of videos.

The competitive forces in the movie rental industry are quite strong, as I will explain through the five forces model. There are a vast amount of substitutes for watching a movie. You can go to a play, sporting event, concert, out the lake/beach, go for a run, watch regular television, go shopping; I could go on and on. Also, torrenting or pirating movies is growing increasingly popular. Buyers have a strong presence in this industry mainly because they are picky about how much they will pay to rent or stream a movie. With the amount of substitutes and their pickiness, they make this

One the one hand, the fertility of the industry opened the doors to corporations that sighted substantial growth potential. New entrants with big pockets such as Walmart could pose a certain threat to Netflix, by exploiting a playing card based on cost reduction. On the other hand, barriers to entry became relatively significant as established video rental retailers such as Netflix have the experience and the knowhow to market movies to people. In this industry, firms that do not have a technological advantage can’t compete. The best example is Netflix’s CineMatch program that offered personalized film recommendations based on customer’s rental patterns. This way, Netflix was able to better serve its subscribers. From a cost perspective, the movie rental industry requires high capital expenditures, and the major expenses are highly related to acquisitions of DVD library and investments in technology (exhibit 2 continued). Thus, we may say that entry is difficult in this industry as the competing firms have reputation, experience and recognizable brand names.

Has e-marketing and the use of the internet hurt Blockbuster's dominance in the movie rental business and if it has what will they have to change in their business plan to regain their market shares? This case has studied the influence of new technologies for delivering movie rentals along with downloading movies directly to your television at home without a customer even getting off their couch. It also examines the impact DVD recorders are going to have on Blockbusters main products like DVD players and VCR's. The case talks about the threats these new innovations are going to have on Blockbusters business potential. Along with what Blockbuster has done to compete with their new competitors like Wal-Mart and Netflix. With the internet